Bills Take Aim at Big SFR Providers

Lew Sichelman

Lawmakers in Washington, D.C., are taking dead aim at big money investors in single-family homes, and the sector is taking them seriously.

One measure thrown into the hopper in recent weeks would require these investors to divest their current holdings and not buy any more houses. Another would require them to pay $10,000 per unit owned into a fund to help first-time home buyers.

However, the National Rental Home Council said in a prepared statement that this kind of legislation would “only limit the availability” of affordable single-family rentals and would serve to exacerbate the housing shortage rather than relieve it.

“We need serious policy solutions,” said the trade group that speaks for Wall Street investors who buy up single-family houses and turn them into rentals or build houses specifically for that purpose.

Lawmakers take a stand

But Oregon Sen. Jeff Merkley and Washington’s 9th congressional district Rep. Adam Smith are serious, saying their End Hedge Fund Control of American Homes Act is a “forceful” response to the issue of “what happens when Wall Street buys most of the homes on your block?”

The bill would ban hedge funds from owning single-family houses and require them to sell at least 10 percent of their current holdings per year over a 10-year period. After that, all such ownership would be totally banned. The measure defines hedge funds as corporations, partnerships or real estate investment trusts that manage funds pooled from investors.

“It’s time for Congress to put in place commonsense guardrails that ensure all families have a fair chance to buy or rent a decent home in their community at a price they can afford,” Sen. Merkley, a member of the Appropriations Committee, said in a prepared statement. “The housing in our neighborhoods should be homes for people, not profit centers for Wall Street.”

The measure has a few cosponsors in both chambers. But it is endorsed by the National Consumer Law Center, Consumer Action, National Housing Law Project, Public Citizen, Private Equity Stakeholder Project, Center for Popular Democracy, National Housing Resource Center and the Washington Low-Income Housing Alliance.

Democrats also introduced separate legislation recently that would require corporate owners of more than 75 single-family houses to pay an annual fee of $10,000 per house into a trust fund to be used for down payment assistance for families needing help in buying their homes.

The sponsors of the American Neighborhoods Protection Act, Reps. Jeff Jackson and Alma Adams, are both from the Charlotte-area where the issue of corporate-owned housing has received both local and national attention. Roughly one out of every five houses sold in the Charlotte market went to corporate owners last year, they said.

“We already have a housing shortage that is driving up home prices and rent,” Rep. Jackson said in a prepared statement announcing his bill. “If we allow unchecked corporate purchasing of houses— especially if they are then rented out—it makes the goal of home ownership even more difficult for families.”

Combating criticisms

But the National Rental Home Council says these lawmakers are missing the point. In a lengthy and seemingly angry statement posted on its website, it says it is “blatantly inaccurate” to refer to the vast majority of SFR home providers as hedge funds. Rather, the sector is made up of a wide variety of owners and builders that includes publicly-traded companies.

The council also maintains any claim that large providers of SFR have the ability to control housing markets is unfounded and that it is “not supported” by the evidence that they negatively impact home ownership.

David Howard, CEO of the National Rental Home Council, told Multi-Housing News that it is not the organization’s intent to sound angry. “Anytime legislation is introduced that is harmful to the industry, we are going to respond as we need to,” Howard said.

“This is an important issue and we want to make sure our perspective is adequately disseminated and understood,” he added.

All too often, Howard said, the accusations and criticisms of single-family rental providers don’t include  any perspective as to what they bring to the market.

“We feel we have an important role to play, particularly at a time when housing production is at an all-time low,” he told MHN. “To a lot of people, renting a single-family house makes a lot of sense.”